Best Supply Chain Solution Winner: LyondellBasell

Published: Aug 2023
Photo of Antonio Migliaccio, J.P. Morgan and Adela Angelescu, LyondellBasell.

Photo of Antonio Migliaccio, J.P. Morgan and Adela Angelescu, LyondellBasell.

Tom Grasso

Assistant Treasurer

LyondellBasell is a chemical company that sells products into more than 100 countries and is the world’s largest producer of polymer compounds and the largest licensor of polyolefin technologies. Their materials and technologies are advancing solutions in food safety and access, clean water, cleaner air and fuel efficiency, quality healthcare and sustainable and modern living. The company operates in major markets including the US, the UK, the Netherlands, Hong Kong, Brazil, China, India and the UAE.

in partnership with

J.P. Morgan logo

SCF solution supports ESG goals and uses ESG ratings to benchmark suppliers

The challenge

Given the economic volatility of the past few years, finance and treasury professionals at LyondellBasell (LYB) have sharpened their focus on working capital efficiency as part of a firm-wide value enhancement programme. At the core of this effort is a strategy to improve the company’s days payables outstanding (DPO) performance metric. While extending payment terms is a key objective, LYB was equally concerned with the health of the supply chain, and the cash flow pressure suppliers would face from any extension of terms.

At the same time, the team was looking for ways to contribute to the company’s broader ESG priorities. This presented an opportunity to launch one of the first global supply chain finance (SCF) programmes in the US with an ESG-linked feature.

The solution

In 2021, the team set out a goal to put a supply chain finance solution in place that would achieve the key objectives of integrating seamlessly with the company’s single global SAP instance, providing broad currency and country coverage to support maximum supplier participation, and helping drive broader sustainability objectives in procurement. Achieving these objectives would enable a win-win scenario for both the company and its suppliers.

The global scope of the programme was ambitious, providing SCF in all four major regions LYB does business – NAM, EMEA, APAC and LATAM. The programme would also cover 40 to 50 global buying entities involving more than 15 currencies. As well, it would provide increased visibility to suppliers through access to real-time invoice status using the programme interface designed by Taulia. Adding to the challenge, LYB wanted to roll out its programme in record time and achieve meaningful buy-in with smaller suppliers who wouldn’t traditionally be included in such initiatives.

Best practice and innovation

LYB’s treasury team formed and led a large cross-functional project team, including critical functions such as procurement, supply chain, business divisions, accounts payable, accounting, IT and legal. There was executive sponsorship of the group from the CFO as well as a steering committee. This project team was not only responsible for choosing a solution provider and implementing the SCF solution, but also for guiding its development and ongoing operations. The LYB team was complemented by the financial programme expertise of J.P. Morgan and the financial technology expertise of Taulia.

To ensure the SCF programme was strategically aligned with corporate ESG objectives, the team ensured the programme would use an ESG-linked feature related to early payments pricing. This approach was unique at the time in the US and had only been applied by few companies. To accomplish this, LYB utilised ESG ratings to benchmark suppliers, offering improved pricing for suppliers with qualifying scores. The company believes this feature will incentivise suppliers to obtain ESG scores and improve them over time.

A further innovation was the ability of the SCF solution to provide seamless, single sign-on integration with the existing SAP solution, improving the efficiency and security of the programme that touches several functions throughout the company.

Key benefits

  • Risk mitigated.

  • Exceptional implementation (budget/time).

  • Improved key performance indicator (KPI) metrics.

  • LYB’s solution is a leading SCF example which includes:

    • Deployment of a state-of-the-art solution globally and at scale.

    • A high-functioning project team that moved with speed for implementation.

    • A differentiated partnership between a top-tier bank (J.P. Morgan) and a fintech company (Taulia).

    • A sustainable win-win solution for suppliers and the company.

    • Outreach to all sizes of suppliers, big and small.

“Supply chain solutions need to be simple and effective. J.P. Morgan had the foresight to know that a nimble technology company with a state-of-the-art supply chain finance architecture would provide the most future-proof and easy to use platform for both our company and our suppliers.”

Tom Grasso, Assistant Treasurer

Heather Crowley

Managing Director, Global Head of Core Trade & Supply Chain Finance, J.P. Morgan Payments

LyondellBasell undertook an ambitious goal to rapidly implement a supply chain finance programme, covering its extensive global footprint, in support of the advancement of its working capital objectives while remaining mindful of supplier impact. This could not have been achieved without treasury’s focus on cross functional collaboration and senior executive engagement. The result is the establishment of a world class programme that will continue to support Lyondell’s working capital goals along with the overall health of its supply chain, while carefully aligning with corporate sustainability objectives. The entire J.P. Morgan team congratulates Tom and Lyondell on the receipt of this award.

in partnership with

J.P. Morgan logo

The Adam Smith Awards is the industry benchmark for best practice and innovation in corporate treasury. The 2023 awards attracted 320 nominations spanning 34 countries. To find out more please visit: treasurytoday.com/adam-smith-awards.

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